In a decision sure to be applauded by publically traded
corporations, the Supreme Court of British Columbia, in Merit Consultants International Ltd v
Chandler, recently dismissed a defamation claim which was
brought against a corporation for publically commenting on ongoing
litigation in a corporate news release.
At issue in the case was a newsletter issued by a publically
traded corporation. In this news release the corporation described
its general intention to defend itself against an action for breach
of contract and its intention to bring a counterclaim alleging
negligence and breach of contract. In response to the news release,
the plaintiff in the breach of contract action brought an
additional action against the corporation for defamation.
The Court held that, just as a plaintiff's pleadings are
protected by privilege against defamation claims, a defendant's
behavior in response to those pleadings is similarly protected by
privilege against defamation claims. However, the Court found it
unnecessary to determine whether the applicable privilege was
absolute or qualified. In reaching its decision, the court
emphasized the corporation's comments were not egregious and
that the public has an interest in protecting the freedom of
expression of participants in the judicial system.
This does not give a publicly traded corporation an absolute
license to make defamatory comments in a news release, but does
signal that corporations may more confidently comment on ongoing
litigation without fear of provoking a defamation action.
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